'Healthier' sports drink maker Kill Cliff attracts outside investor

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Dive Brief:

Sunrise Strategic Partners purchased a minority investment in Kill Cliff, a clean recovery and hydration sports drink, the companies said in a statement. The amount of the investment was not disclosed.

Kill Cliff was founded by former Navy SEAL Todd Ehrlich, who wanted a healthier and better tasting alternative to soda, sports drinks and other post-workout beverages. The product comes with a clean ingredient label, electrolytes, B vitamins, no sugar and 15 to 20 calories.

The investment from Sunrise will allow Kill Cliff to increase distribution and support marketing efforts to reach new consumers, the company said. Kill Cliff is already sold by retailers including Amazon, Whole Foods, Kroger and Hy-Vee.

Dive Insight:

Sports drinks are a huge market, representing about $8.5 billion in annual sales, with each person drinking about 4.7 gallons of sports drinks in 2015, according to Statista. The market is largely dominated by Pepsico's Gatorade — with about a 70% share — and Coca-Cola's Powerade.

Sport drinks were initially developed for athletes, but are increasingly consumed by others, including children. This growth, coupled with an increasing push by the public to drink more nutritious and natural beverages with no sugar or artificial colors and flavors, has opened up a market for companies such as Kill Cliff. The sports drink segment as a whole also is under pressure from other beverage categories that are quickly growing in popularity, such as coconut and aloe water.

"We believe the product's clean ingredient label will appeal to a wide range of consumers, and we are excited to team up with KILL CLIFF to help them expand the brand's footprint in more gyms and grocery stores," Steve Hughes, CEO and co-founder of Sunrise Strategic Partners, said in a statement.

The large beverage giants have worked hard to protect their market share. PepsiCo announced last year it was launching three U.S. Department of Agriculture-certified organic varieties of Gatorade, called G Organic, after two years of researching natural and organic ingredients. Just months earlier, Coca-Cola said its Honest Tea brand was making its sports drink category debut with the launch of Honest Sport, a brand "for athletes looking for a sports drink made with simple, premium organic ingredients.”

Coca-Cola and PepsiCo have the advantage of significant brand recognition, especially for Gatorade — which is synonymous with sports drinks — as well as a deep budget for research, access to valuable consumer data and a huge distribution network.

But as countless big brands have seen — most notably Yoplait, which was overtaken by Chobani as the U.S.'s largest brand in the yogurt segment last year — nimble upstarts have an advantage, too. They are widely perceived as more wholesome, less corporate and able to respond to changing consumer tastes much faster. For Kill Cliff, those advantages and further successes could ultimately attract the interest of the very same beverage giants they are trying to unseat. Companies like PepsiCo and Coca-Cola could see Kill Cliff as perfectly positioned to capture further growth in the natural and organic space, making it a perfect complement for their existing sports drink portfolios.